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TMI Blog2023 (9) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... firm was not involved in any actual business activity at all which prima facie proved that the transactions so reflected in books of account were bogus. Though a feeble argument had been raised to the effect that no opportunity to crossexamine the said Sh. Avinash had been given to the petitioner, however, there is nothing on record to suggest that any specific prayer had been made by the petitioner to allow him to cross-examine Sh. Avinash at the time when the proceedings on impugned notice were conducted Thus transaction of purchases being made by the petitioner from M/s NSE had been found to be bogus one on the basis of subsequent information, the mere disclosure of the same at the time of original assessment proceedings could not be considered to be disclosure of true and full facts and, therefore, in our opinion, the assessing officer certainly had jurisdiction to re-open the concluded assessment. Decided against assessee. - HON'BLE MS. JUSTICE RITU BAHRI AND HON'BLE MRS. JUSTICE MANISHA BATRA Present: For the Petitioner : Mr. Pankaj Jain, Sr. Advocate with Mr. Divya Suri, Advocate and Ms. Sameeksha Gupta, Advocate. For the Respondents ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d escaped assessment had been brought on record and no reasons for formation of belief for re-assessment had been mentioned in the notice; that the principles of natural justice were violated as fishing/roving inquiry was made in the garb of re-assessment proceedings and that there was no omission or failure on the part of the petitioner to disclose fully and truly all material facts. Accordingly, prayer had been made for issuing writ of certiorari. 3. The respondents filed reply through respondent No.3 submitting therein that while framing assessment of income of firm of Sh. Avinash for the A.Y. 2014-15, it was revealed that the details available in its balance sheet and trading account were suspicious. He was required to explain those transactions. He recorded a statement on 12.12.2016 disclosing therein that though he had got M/s NSE registered for trading of rice bran but infact no actual business was conducted by making purchases and sales and he was instrumental in providing accommodation entries only to different firms. He disclosed the names of ten such firms. The documents pertaining to his firm were impounded which included sales ledger pertaining to the period from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural justice. No opportunity to cross-examine the proprietor of M/s NSE had been given to the petitioner and, therefore, it was urged that the petitioner deserved to be granted the reliefs as prayed for. 6. Per contra, learned Standing counsel for the revenue submitted that the writ petition was not maintainable as efficacious and alternative remedy in the form of appeal was very much available to the petitioner. The challenge to the impugned notice and order dated 24.11.2021 was totally misconceived. A prima facie opinion regarding an escapement of income was sufficient while examining the re-opening of assessment and the same did not need to be established with conclusive proof of evidence. While framing assessment in the case of M/s NSE, tangible material had come on record to prove that the petitioner was engaged in receiving accommodation entries from the said firm which was not engaged in conducting any actual business activity and this was done to cause loss to the revenue. The assessing officer did not have the occasion to deal with this issue earlier while conducting scrutiny assessment for the A.Y. 2014-15. All the conditions requisite for re-opening the assessment wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned notice has been issued against the petitioner under Section 148 of the Act. Section 147 of the Act is also relevant for the purpose as per which, if an assessing officer has reason to believe that any income chargeable to tax has escaped assessment for any particular assessment year, he may subject to provisions of Sections 148 to 153, assess or reassess such income. The proviso to this section says that no action shall be taken under Section 147 of the Act after the expiry of four years from the end of relevant assessment year, unless any income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to make a return, or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. The right to take action under Section 147 is subject to following conditions:- (i) The Income Tax Officer should have reason to believe that the income chargeable to tax has escaped proper assessment. (ii) He should have reason to believe that such escapement was by reason of omission or failure on the part of an assessee to disclose fully and truly all material facts for his assessment for that assessment year. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer is to administer the statute with solicitude for the public exchequer within an inbuilt idea of fairness to taxpayers. Reliance can also be placed upon Central Provinces Manganese Ore Co. Ltd. v. ITO, Nagpur, (1991) 191 ITR 662 , wherein it was observed by Hon ble Supreme Court that at the stage of issuing notice under Section 147 (a) (as the provision stood at the relevant time), the only question was whether there was relevant material on which a reasonable person could form the requisite belief. Whether the materials would conclusively prove the escapement, was not the concern at that stage. This was so because the formation of belief by assessing officer was within the realm of subjective satisfaction. Similar observations were made in Raymond Woollen Mills Ltd. v. Income Tax Officer and others, (1999) 236 ITR 34 and Income-Tax Officer, Calcutta v. Selected Dalurband Coal Pvt. Ltd., (1996) 217 ITR 597 (SC). 10. In view of the position of law as discussed above, the questions that arise for consideration are that whether there was true and full disclosure of all material facts on the part of the assessee at the time of filing of the return for relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner. From these documents, it is explicit that M/s NSE had maintained account regarding sale of rice bran etc. to the petitioner during the relevant year. In the circumstance, when Sh. Avinash proprietor of M/s NSE had given a categoric statement before the assessing officer that his firm was not involved in any actual business activity and was providing bogus entries of sale/purchase to different firms, it was quite reasonable for the assessing officer to presume that the entries qua sale of rice bran etc. shown to be made in the sales register of M/s NSE to the petitioner were also bogus entries and, therefore, in our considered opinion, the information furnished by the petitioner at the time of original assessment had itself been found to be controverted on the basis of subsequent information received by the revenue while framing assessment of M/s NSE and the formation of belief by the assessing officer that income chargeable to tax had escaped assessment on the basis of inquiries conducted during the course of assessment of M/s NSE was reasonable one. Therefore, the objection raised by the petitioner as to the impugned notice dated 30.03.2021 on the ground that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of original assessment proceedings could not be considered to be disclosure of true and full facts and, therefore, in our opinion, the assessing officer certainly had jurisdiction to re-open the concluded assessment. In this regard, we place reliance upon Phool Chand Bajrang Lal v. Income Tax Officer, AIR 1993 SC 2390, wherein it was observed by Hon ble Supreme Court that the acquiring of fresh information, specific in nature and reliable in character, relating to the concluded assessment, which went to expose the falsity of the statement made by the assessee at the time of original assessment was different from drawing fresh inference from the same facts and material which were available with the Income Tax Officer at the time of original assessment proceedings and if the transaction conducted at the time of original proceedings itself is found to be bogus subsequently, its disclosure would not amount to disclosure of true and material facts. Accordingly, the argument raised by learned counsel for the petitioner on this point is liable to be rejected. 12. As per the discussion made above to the effect that it was proved on record that the assessing officer had reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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